Local Government House, Smith Square, London SW1P 3HZ T 020 7664 3000 F 020 7664 3030 E info@local.gov.

.uk www.local.gov.uk
Chief Executive: Carolyn Downs

Dave Burbage,
Interim Managing Director

Isle of Wight Council
County Hall
High Street
Newport
Isle of Wight
PO30 1UD 14 July 2014


Dear Dave

Isle of Wight Council - Corporate Peer Challenge

On behalf of the peer team, thank you for your invitation into the Isle of Wight
Council to deliver the recent corporate peer challenge. The team felt privileged to be
allowed to conduct its work with the helpful support of you and your colleagues who
were open and engaged with the process. It was clear that a significant amount of
effort had been committed by the council in support of the peer team.

You asked the peer team to provide an external view of the council and give recognition
of progress made; and supportive challenge and feedback on how you are prepared to
meet future issues and opportunities for the Isle of Wight.
You also asked the team to provide specific feedback by testing the councils thinking on
the following:
1. To consider alternative delivery models that would enable delivery of the councils
vision and priorities in a difficult financial environment. [This was not a detailed
options appraisal on services and models. Rather it was a review of current thinking
and activity to propose additional areas for the council to consider.]
2. To review what more the council might do, by itself and by working in partnership, to
promote and ensure the delivery of economic growth for the island, its residents and
businesses.
In addition the peer team considered the ability, resilience and capacity of the council
to deliver its future ambitions by looking at:

o understanding of local context and priority setting: does the council understand its
local context and has it established a clear set of priorities?
o financial planning and viability: does the council have a financial plan in place to
ensure long term viability and is there evidence that it is being implemented
successfully?
o political and managerial leadership: does the council have effective political and
managerial leadership and is it a constructive partnership?

14 July 2014 2

o governance and decision-making: are effective governance and decision-making
arrangements in place to respond to key challenges and manage change,
transformation and disinvestment?
o organisational capacity: are organisational capacity and resources focused in the
right areas in order to deliver the agreed priorities?

It is important to stress that this was not an inspection. Peer challenges are
improvement-focused and tailored to meet individual councils needs. They are designed
to complement and add value to a councils own performance and improvement plans.
The peers used their experience and knowledge of local government to reflect on the
information presented to them by people they met, things they saw and material that they
read.

This letter provides a summary of the feedback that was presented at the end of our
recent on-site visit. In presenting this the peer challenge team has done so as fellow local
government officers and members, not professional consultants or inspectors. Our
intention is to provide recognition of the progress the Isle of Wight Council has made in
recent years while also stimulating debate and thinking about future challenges.

Overall message

The council is working to an Independent administration elected in May 2013. The
administration is working without overall control, having 20 of the 40 seats on the
council. This makes continued working with other political groups essential.

The Independent administration set out its programme in a manifesto Framework for
Change. This includes a commitment to openness and working with others. The year
since the election has been an important one to establish the future direction of the
council, now contained in the Corporate Plan for 2014-2017.

Political leadership is well regarded at the council. The wish to be transparent and
inclusive is widely recognised and valued and the active representation of island
interests with principal partners is evident. However, as an Independent administration,
operating without a group whip, uniting behind issues can be difficult and affect the
councils ability to make decisions. It is potentially damaging if the delivery of priorities
is weakened by local issues taking precedence over corporate priorities and this will be
an area to manage in the future. The Corporate Management Team (CMT) will have an
important role to support Members on this.

The Independent administration has to address a significant financial gap of 28m for
the three year period 2014-2015 to 2016-2017. Making a budget for 2015-2016 is likely
to be most challenging with the requirement to bridge a gap of 13.293m. This will
require a great deal of preparatory work on how and where savings will be achieved and
some difficult decisions to be made in a very short timeframe. The CMT will have an
important role to support Members on this.

The team has identified stretched capacity and capability at all levels of the
organisation. There is an urgent need to ensure that the council has the necessary
strategic and operational skills and capacity to deliver savings and corporate priorities.

14 July 2014 3


Funding pressures will require the council to rethink its future role and priorities with
reduced resources. This will limit ambition but does provide the opportunity to rethink
and recast the councils future role. One clear message from partners was their wish to
see the council assume a role in bringing partners together and being the voice of the
island to represent island interests more widely.

To be the voice of the island will require strong leadership and effective
communications. Internal communications are primarily delivered through The Vine
a weekly electronic newsletter. However, internal communications are not proving
sufficient, at a time of great change for the council and its staff, and need to be
bolstered. Improved external communications to the island population will also be
important. . It would be worth the council considering reintroducing the One Island
community newsletter on the basis that this be cost neutral.

The opportunities for disseminating and celebrating the positive messages from much of
the good work being done - people and achievements are being missed.
Acknowledgement of what the council and its Members and staff are delivering is
important during the period of recent upheaval and with the many challenges that lie
ahead. These issues could be addressed by strengthening the communications
function, with elements currently dispersed in different services. Combining these
would provide greater capacity for coordinated communications and marketing. In the
future both communications and marketing will be important functions of the council and
would benefit from clear direction set out in a communications strategy.

The island has an ageing population with more than 24 per cent over 65 years, where
the national average is 16 per cent, and is expected to grow to 36 per cent by 2035.
This has implications for the economy: both for the future housing and social care
needs of an ageing population and the shrinking proportion of the working age
population. The council will need to develop future housing plans for sheltered, extra
care, residential care and other retirement housing options.

The council is moving to shared services, with different reasons for each service. For
example, the strategic partnership with Hampshire County Council, to deliver childrens
and education services, was prompted by an Improvement Notice issued after critical
Ofsted inspections of child safeguarding services in 2012 and school improvement
services in 2013. Separately, the council entered into a twenty-five year highways
private finance initiative (PFI) in 2013 with Island Road Services, with the benefits of
longer-term capital investment and taking cost out of the councils budget.

In moving to future strategic partnerships it will be important to consider what the
councils core services will be in the future operating model and to be clear on what
benefits will be derived from different partnerships. The imperative should not simply be
on savings or response to service failure but a broader consideration of what the council
is able to offer, what it wants from any such arrangement, how this fits with the councils
priorities and the future operating model.

The term operating model is used throughout this letter. To avoid confusion over this
term the working definition is how the organisation of complex systems operates to
accomplish its function. It can be described as the way an organisation does business.

14 July 2014 4

Moving to a new operating model will need a vision of what kind of council the Isle of
Wight will be, in line with its priorities, and what decisions are made on the services to
be provided, how they are to be delivered and to what cost and standard.

In moving to a new operating model the council is developing some excellent initiatives,
for example joint venture housing delivery, co-funding a destination management
company, joint funding of a tidal energy project etc. Important as these new models are
it is also important to ensure that the learning from these is shared across the council.

The council has an adopted Core Strategy and this has an important role in providing a
spatial vision to support economic growth. However, the council does need to produce
an economic growth strategy linking tourism, business, skills and housing. This will be
an important piece of work to tie into the work of the Solent Local Enterprise
Partnership.

At the same time the council will need to demonstrate that it is serious about economic
growth and is open for business. Planning applications which would have contributed
to inward investment have recently been refused against officer recommendation. This
is an issue for the council to manage.

Similarly there is currently no forum that brings together principal tourism, business, skills
and housing partners. This is vital to coordinate activity and would contribute to the role
business partners have identified for the council, being the voice for the island. It will be
important to establish such an economic growth partnership.

The importance of the ferry crossings for business, residents and visitors makes it essential
that strategic ferry transport issues are addressed and this can be achieved through the
Quality Transport Group with issues referred back to the council for wider planning
consideration and to the LEPs Solent Local Transport Board, as appropriate.

Partnership working is essential to generate capacity to deliver on priorities. The council
has a good record of partnership working and the new administration has particularly
focused on building new relationships and strengthening partnerships and encouraging an
open door approach. This has delivered some strong joint outcomes with the third sector,
town and parish councils and business partners. However, some historical partnerships
may no longer be achieving what was intended and a review would be helpful to check this.
This will ensure that resources are only committed to productive partnerships.

Finally, the council has made sound progress over the last year under the new
administration. The council recognises that it is in transition and is presented with
significant challenges. It is intended that this peer challenge will assist the council to meet
these successfully.

The recent journey

Local context and priority setting

Pride of place is very evident in the Isle of Wight and is reflected in the work of elected
Members who are ambitious for the council to deliver for the best interests of residents and
businesses. The new Independent administration is promoting cross-party working as part

14 July 2014 5

of its commitment to inclusive working and transparency. This is important in a context of
no overall political control but also important to bind Members to work for the interests of
the island.

Political ambition is supported and directed by a Corporate Plan for the period 2014 2017,
which will take the council up to the next council elections. There are seven corporate
priorities, including growing the economy and tourism and working in partnerships to
improve outcomes. These are both areas discussed further in this report.

However, the current iteration of the Corporate Plan implies that all seven priorities carry
equal weighting and equal access to resources. It will be important to establish what can
actually be delivered within the resources available, targeting resources in line with
Members greatest priorities. The opportunity exists for Service Plans to address this, with
Executive/Corporate Management Team (CMT) direction, and will be an important piece of
corporate financial management to get right. Clearer (re-)prioritisation and clarity about
what will not be done will assist the council in its savings programme over the next two
years.

There is evidence of strong social capital and enterprise arrangements on the island. The
team were told of a number of examples where community ventures are operating leisure
and other facilities and, separately, of a local housing association and Citizens Advice
Bureau keen to work with the council on joint provision of housing and benefit advice. This
is important as it shows that others can deliver on what might have been previously
regarded as council activities. This may be even more of an advantage by virtue of the
council promoting self-reliance. The council has a vital role to nurture and to promote such
enterprise.

The council does receive a good deal of damaging and negative messages, particularly
from local media. It could consider a more proactive stance by developing a
communications strategy to support its response to such messages and to better enable it
to promote much of the good work done by different services.

The council is involved in a lot of good work but this is not being positively promoted.
Instead there is a danger that the attention on the funding gap the council is working to
address could overshadow the good work being delivered. The inward focus on savings is,
not surprisingly, causing staff to dwell on the financial future and there is a consequent risk
of losing sight of delivering outcomes for residents/customers.

The peer team met a large number of council staff and were impressed by their
commitment, energy and goodwill. It is important to tap into this as it offers a firm
foundation for the council to build on.

There is a good clear planning framework in place, with the Core Strategy being adopted in
2012, and the intention to develop Area Action Plans (AAPs), along with the council support
for emerging Neighbourhood Plans. This provides a clear spatial vision and a firm base to
plan economic growth and sustainable communities for the island.

However, the team did not find a longer-term economic vision for the island, with the detail
of what it will look like in 5 and 10 years time. For example, what kind of future economic
profile is anticipated and planned for, what will be the skills base to support the economy

14 July 2014 6

and aspirations of young people and what kind of housing and where? It was also not
clear what the timetable was for the development of AAPs and whether growth/inward
investment was contingent on these being in place. Similarly while the council has
identified sites for development, available with planning permission, there was no evidence
of the council marketing these sites to potential investors. To demonstrate it is open for
business the council needs to show that it is serious about economic growth and that it is
actively enabling appropriate development that supports this.

Finally, the council does need to produce an economic growth strategy linking tourism,
business, skills and housing. This will be important to set out a vision that chimes with
businesses and residents and fits with the strategic priorities of the Solent Local Enterprise
Partnership (Solent LEP). This is an opportune time to progress this with the council
having just submitted its Strategic Economic Plan (SEP) bid for Local Growth Fund funding.

Recommendations:

a) Develop a Communications strategy that is supported by the aggregation of
communication functions
b) Produce and implement an Economic Growth strategy linking tourism, business,
skills and housing that includes a longer-term economic vision for the island. Involve
business and principal partners in the development of this.

Management and political leadership

The Leader is highly regarded, showing leadership through engagement with a number of
principal partners, including the Solent LEP, the Partnership for Urban South Hampshire
(PUSH), and other external bodies and with staff. It was also clear that while he was
representing the Isle of Wight he was also working with sub-regional agendas and
priorities.

The new administration was described by staff and partners as a breath of fresh air. The
commitment to transparency and inclusive working has undoubtedly helped, as has the
enthusiasm and energy evident in the eleven months since taking control. However, the
coming period will be critical to continue progress on the delivery of the Corporate Plans
priorities. The new administration may have found its feet in its first year in office but now
needs to find its voice and ensure it is clearly heard on and off the island.

This is supported by Members who are highly ambitious for the island and are focused on
council delivery. Members collegiate working was evident, for example the recent majority
votes to approve a 1.99 per cent increase in Council Tax and to re-elect the Leader.
Consensual working is essential for an administration with no overall political control, and
for the delivery of an ambitious programme, requiring cross-group support to implement.

The desire for consensus can, at times, delay and confuse political decision-making. For
example, the council is making economic growth and tourism a priority but there was an
recent instance of proposed investment that had planning permission rejected, with local
views appearing to override wider council growth priorities. The council recognises the
need to manage its working arrangements to hold the line on agreed decisions and
priorities as not to do so will jeopardise its credibility with developers/inward investors.


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The council has undoubtedly lost capacity and some capability in the recent restructuring (a
reduction of 521 posts to the current level 2,129 posts). This reduction in capacity needs to
be managed with a realistic and focused set of priorities so that workloads for staff are
equitable. Related to this is the absence of strategic knitting across the new structure and
the lack of time set aside for strategic planning. Strategic capacity is important to enable
the council to: consider new ways of thinking and doing; give time to focus on Member
priorities; ensure joined-up working across disparate services to deliver priorities; shift
resources to priorities; plan proactively to shape the new operating model etc. Instead the
emphasis appears to be on addressing the funding gap and taking an operational focus.

The councils short-term priorities are contained in the Corporate Plan and the focus on
addressing the funding gap. What is missing is a picture of: the most important outcomes
for the island, and those areas where the council can best add value to these; what the
future council might look like in light of this; the councils representative role for the island;
new working approaches that might be utilised; and what will be the core council services
provided to the islands community to deliver the councils priorities. This longer-term vision
is important, as decisions made on services in the short-term will have an effect on what
the future council will look like and, hence, the ability to deliver on priorities. These
decisions should not be ad hoc but informed by a longer-term understanding of the future
council and its role. Following a period of the new administration dealing with a number of
inherited issues attention will now be given to developing a longer-term vision for the future.
The senior managerial leadership is working closely with Members to develop and
implement a shared long-term vision.

There is an urgent need for a Member/officer protocol to provide clarity and certainty on
respective roles and responsibilities and to describe the flows in decision-making and most
importantly, the appropriate behaviours to be demonstrated. This is important because the
current working arrangements are not well understood by Members and officers. For
example, members of the new administration had differing views on how the new hybrid
committee system would work and had received mixed messages from officers that led to
uncertainty on the role of Executive members on advisory committees. This may have
been exacerbated by the high number of new Members (23) elected in May 2013 who will
have been on a steep learning curve on council working.

Work will be needed to ensure that all Members understand how council decisions are
taken, scrutinised and advised on. Similarly, work is needed to describe how the
administration, CMT, Overview and Scrutiny and advisory committees, feed into this
process. A decision flowchart is needed showing clearly who is responsible at each level
for council decisions and scrutiny.

Recommendations:

c) Create strategic space, time and capacity for the Executive and Corporate
Management Team (CMT) to develop a longer-term vision for the council and the
island
d) Show an open for business outlook to developers and investors and ensure that the
council is serious about economic growth by actively enabling development that
supports this.


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Alternative delivery models

Alternative delivery models are a major area of development for English local government.
These are sometimes driven by necessity where severe funding pressures mean that
traditional forms of service delivery are unsustainable, but can also be used to improve
service outcomes for residents and businesses. This is leading local government to
explore new models, working in new partnerships and characterised by councils shifting
their approach to managing risk. Much innovative and transformational work is being
undertaken and the LGA would be pleased to support the council to explore this.

The council is open to new partnership working models and there are a number of
examples where these have been introduced. There is some excellent joint venture work
being delivered, for example the Pan Meadows housing provision in Newport where the
council is making available land, working with Spectrum Housing Association, the Homes
and Communities Agency (HCA) and developers Barratt David Wilson Southampton. The
overall scheme has 846 units with a mix of private, shared ownership and rented homes.
The development incorporates a country park, public squares and play areas. Heating and
hot water is to be provided by a bio-mass plant.

Similarly the council has considered invest to save opportunities, for example the My Life
a Full Life programme where investment in independent living support is designed to
postpone costly residential/nursing care provision.

The council has worked with Surrey Fire and Rescue Service (FRS) to deliver Control
Room services which has resulted in an efficient service that also delivers value for money.
It is now developing a business case for combining or merging its FRS with another. The
rationale for this likely to cover: savings to each authority; additional resilience offered;
sharing the specialist expertise on the Isle of Wight in providing a complete island service
and mutual learning and expertise to be gained by working together.

Hampshire County Council is highly regarded as a strategic partner and has worked with
the council to recently adopt a Children and Young Peoples Plan 2014-2017. The
councils priority of keeping children safe is supported by a budget increase of 2.25m for
the current financial year. The Childrens Improvement Board is making good progress
where the front door is safe and the service is preparing for an Ofsted inspection later in
the year. It is also gaining from the professional input of a high performing Hampshire
service, which is having a positive impact on council staff and outcomes for children.

However, such work on alternative delivery models appears ad hoc and opportunistic.
There is no systematic methodology to rigorously identify and evaluate alternative delivery
models and to share learning from existing models. This should be an essential
component to aid the shift to the future council operating model and the council becoming a
learning organisation. Sharing the learning from new working models can stimulate
thinking in other services and offer a means to leverage capacity to deliver on council
priorities.

The Isle of Wight Clinical Commissioning Group (CCG), Isle of Wight NHS Trust and the
council serve a population of just over 140,000 and the three organisations are coming
together, in collaboration with the voluntary and private sector, to deliver a vision for

14 July 2014 9

integrated care and support. One outcome from this is the My Life a Full Life programme; a
collaboration between the CCG, the NHS Trust and the council supporting interventions to
promote independent living.

Health and Social Care integration is progressing well, for example, through work on the
Better Care Fund and the Urgent Care Hub. The latter locates 999 and 111 responses,
crisis response, district nurses, hospital switchboard and Wightcare in one place. There
was anecdotal evidence of this making a positive impact on users experience and of
achieving cost savings.

The island benefits from having the only combined hospital, ambulance, community, and
mental health service in the country. This shared island boundary promotes closer public
service working. A question for the council to consider is whether there are opportunities to
go faster and to extend this model.

Such a public service model could be developed as an exemplar to test alternative and new
delivery models in line with the LGAs Rewiring Public Services. This could include other
public service bodies, all of which are facing financial pressures, combining resources to
support the delivery of shared objectives and to maximise capacity in doing so. The LGA
would be prepared to work with the council on how this might be developed.

The council and the CCG are to receive 3.5m NHS Better Care Fund (BCF) resources in
2014 -2015. Under the new arrangements for integrating health and adult social care
services the BCF in 2015-2016 will offer a pooled budget of 19.724m. It is intended that
the council and the CCG work to pool resources to support existing core activity and
develop new ways of working. However, there is further work to be done to:

deliver service efficiencies from adult social care services
develop a demand management strategy for adult social care services
ensure that commissioning is being consistently and appropriately used
apply strong project and programme management principles to drive forward BCF
plans
develop robust mechanisms for the appraisal of alternative delivery models/options
incorporate the required outcomes from the Care Bill in to council planning.

Despite the great deal of energy and activity within the council there can be a lack of
strategic coherence and completion. Examples of this include the job evaluation process
which seems to have been delayed for many months creating uncertainty amongst the
whole staff group, and the lack of strategic knitting between the actions of the council in its
approach to procurement and its economic growth ambitions.

Another example is the root and branch review that informed the budget for 2014-2015. It
is generally accepted that some reviews were more robust than others, with the process
not achieving all of its objectives: the peer team heard it described as disappointing. The
shortcomings appear to include: insufficiently robust project planning, insufficient
leadership, commitment, time and resources. It is important that project evaluation is
developed so that the lessons are learnt from future activity.


14 July 2014 10

The issue of project and programme management was a recurring theme. The council
acknowledges that this has been an area of weakness but the team saw little evidence that
this was being addressed. For example, the programme to address the funding gap is still
sketchy with only a few of the projects developed with clear project management principles.
The difficulty for the council is understandably one of capacity, and possibly capability, but
if these are important areas, and the funding gap is a key area, then it is essential that
programme and project management skills are consistently and coherently applied to
ensure the delivery of intended outcomes and success.

The council would benefit from considering the use of external expertise to drive out cost
and deliver savings. There are a number of reasons why this could be beneficial:

a significant proportion of council spend is on goods and services (19m)
the council has lost capacity and skills in certain areas, which staff have
acknowledged
the urgency of the task to meet the funding gap
external capacity and expertise would enable learning and skills to be captured by
council staff for future activity
there is potential to use a payment by results mechanism.

The council would need to identify the areas where there is high spend and possible lack of
internal skills to drive out cost; for example, high value and specialist contracts. It will be
essential that the council itself drives out costs and savings rather than these being
obtained by an alternative provider, in the event of the service/contract being outsourced.

Successfully meeting current and future challenges facing local government requires a shift
in risk appetite. For many councils, in the face of massive public spending pressures, there
is a trend to become more risk aware. To become more innovative and partnership driven
will require the council to move to a more sophisticated approach to identifying and
managing risks. This will be an important shift to enable the realisation of future
opportunities and progress to the future operating model.

Recommendations:

e) Develop and implement a robust methodology to evaluate potential alternative
delivery models, and ensure learning is shared across the council
f) Establish project and programme management training and development
arrangements for those staff likely to be involved in key projects and programme
management
g) Utilise external expertise to drive out costs and deliver savings to the council. This
should be in high value areas to provide quick wins with payment by results.

Economic growth

Economic growth is a priority for the council: underlying unemployment levels are higher
than other parts of England and rising; many employment opportunities are seasonal only;
and access to mainland employment is contingent on ferry use. Earnings on the island are
80 per cent of the South East average, with a low Gross Value Added (GVA) per capita of

14 July 2014 11

14,023 compared with Portsmouth, Southampton and Hampshire which ranges from 19-
23,000.

The council has become more active in its engagement with PUSH and the Solent LEP.
This is important as both are working within a South Hampshire sub-regional context and
will be influential over coming years in shaping the sub-regional spatial vision and
economy.

The island has gained from European funding, the Solent LEPs Regional Growth and
Growing Places funding and is progressing with the proposed Government designation of
Assisted Area status for twenty-eight wards, with the council continuing to lobby for the
entire island to be designated. This will be important as Assisted Area status allows for
higher levels of public funding to businesses in economically disadvantaged locations than
would normally be allowed under State Aid rules. This support is to encourage business in
these communities to grow and innovate, positively affecting those locations and the
broader economy.

The Solent LEP has recently submitted its Strategic Economic Plan (SEP): this is an
important moment. The determination of the SEP will set out what Local Growth Deal
funding will be available for the sub-region and lead on to the delivery of approved
priorities. For the council this is likely to lead to improved berthing facilities at Southampton
and the possibility of more frequent connections to the island, along with an Enterprise
Zone within East Cowes and Cowes. The opportunities that emerge from the SEP will
require active council involvement and follow-up.

The council has been involved in many proactive actions to drive growth, for example the
Solent Ocean Energy Centre (SOEC) is a joint venture to exploit tidal energy and create, in
due course, more than 600 jobs. Other examples are the investment in the destination
management organisation, Visit Isle of Wight, and the provision of sites with planning
permission for commercial development.

Similarly, the council is actively working with Solent LEP and local businesses to enable the
latter to access external funding opportunities. It has recently established an Isle of Wight
Expansion Fund providing 2.46m of grant funding for island businesses as well as a
Growing Places Loan Fund of 16.74m.

It was clear to the team that partners want to work with the council and are prepared to add
capacity. For example, business partners felt that the council had a vital co-ordinating role
to be the economic voice for the island. This would be important to present a single,
consensual set of priorities to principal partners, such as the Solent LEP and PUSH.

The team were told that, in the absence of certain networks being established, businesses
had often filled the gap. An example of this was the wish of local businesses to set up a
technology group to discuss support arrangements, growth issues, supporting supply
chains etc. and, in the absence of anything, they established the Isle of Wight Technology
Group. In doing so it was discovered there was no information held on the number of
technology companies on the island. Establishing this group showed that there were more
than 40, with many of these being small medium enterprises (SMEs). Another example
was Invest Isle of Wight, established to promote inward investment by land and estate
agents.

14 July 2014 12


However, those who established these groups recognised a danger of muddying the
water of what the different groups were doing, with the potential for duplication. Instead
they identified an important role for the council to coordinate such working arrangements
and to assume a leadership role for island businesses.

The council does not gather information and intelligence of business activity and does not
have a detailed understanding of the various sectors within the local economy. This is
evidenced by the above example of the island technology group and the lack of
understanding on the numbers of technology companies. Gathering intelligence on current
businesses and SMEs is essential to understand sectoral developments and the
requirements and growth needs of businesses.

Partners are willing and ready to work with council on economic growth and have clearly
said they want the council to be the glue, which binds partners to work together, and
provides the focus and voice for the island. Partners are keenly aware of the financial
pressures facing the council and are prepared to contribute resources to enable it to fulfil
this role.

The council has adopted a positive programme in supporting apprenticeships for island
businesses by providing grants of 1,500 to assist SMEs to recruit apprentices. This is not
only addressing an important need for young people on the island but it is also forging
positive relationships with businesses that the council works with. This has been boosted
by a further council commitment to allocate 150,000 in 2014-2015 to support young
people in pre-apprenticeships, apprenticeships and support for people over 50 years to
start their own business. This work constitutes notable practice and is an important
contribution to the local economy. It would benefit from a strategy, including a council
statement of intent, and a commitment to work with partners to extend the use of
apprenticeships by island businesses. The council has failed to celebrate this success and,
as a result, has not received acknowledgement for its considerable achievement.

The council recognises the importance of high speed broadband to ensure island business
connectivity and competitiveness and has invested 3m to support implementation. High
speed broadband is expected to be implemented by October 2015 and should be regarded
by the council as an important marketing aid for inward investment.

Tourism is a key sector of the local economy estimated at circa 630m per annum,
delivering circa 30 per cent of GVA and employing an estimated 25 per cent of residents.
Tourism growth is projected to increase by 5 per cent per annum. For the future economy
it will be essential to attend to the sustainable development of tourism via a tourism
strategy aligned to economic growth, housing, use of assets and skills. The need for a
strategy is confirmed in a discussion paper commissioned from consultants that argues that
the focus should not be on increasing visitor numbers but spend per visitor.

Visit Isle of Wight (VIOW) is a destination management company established by the council
in a bold initiative that shows a clear sign of intent. The council is committed to a nine year
funding agreement of 340,000 per annum with the condition that VIOW attracts private
investment towards running costs. The investment is paying dividends with the visitor
economy experiencing growth of 23m in 2013.


14 July 2014 13

The council recognises the need to change and update the tourism offer but this is not
always being followed through. For example, a recent application for an 81 bed Premier
Inn hotel at Lake, Sandown was recommended by officers but refused by Planning
Committee. The opportunity was for inward investment via a three storey hotel, creating 22
full-time jobs with nearly half of these to be offered to young people not in employment or
education (NEETs). The need for sustainable development is confirmed by ferry operators
who state that development investment needs to be encouraged to improve visitor
accommodation along with enhanced visitor attractions.

Another example was where the council recently refused a planning application, against the
officer recommendation, at Atherfield holiday camp, Ventnor for a redevelopment
comprising 95 units of holiday accommodation, clubhouse, two swimming pools and
service buildings. It will be essential for the council to make the shift to be open for
business and to demonstrate this to businesses and potential inward investors. This is
important to show that it is serious about growth and the benefits this can bring for
residents and businesses.

As in most areas there will be an anti-development lobby and local issues that can block
economic ambition. However, the councils response to such opposition needs to be
managed so that opposition can be understood but not allowed to unreasonably block
economic growth, which ultimately is a corporate council priority. It is essential to achieve a
balance between whole-island and local issues in decision-making to ensure that the
delivery of council priorities are not jeopardised.

Ferry operators provide a vital transportation link for residents, businesses and visitors.
This is highlighted by the net loss of 2,500 employees travelling from the island each day,
principally to Southampton and Portsmouth and by a council motion (October 2013) that
expressed concern for ferry cuts by Wightlink. An increase in economic growth and tourism
will not only benefit the island and achieve council objectives but will also increase ferry
business and profitability and enable them to consider extending ferry timetables frequency
and start/end times. The ferry companies see the council as not currently being open for
business to support island inward investment and this affects their business as well as the
islands economy.

Business representatives told the team separately that they felt the council had a vital role
to liaise with, and to represent island business interests to, the ferry companies. The
council has established a Quality Transport Group which includes the three ferry operators
and business interests. This forum is important and the council will need to be assured that
the Group is responding to strategic matters of mutual interest, and is making the council
aware of these so it can act as needed and can link issues into the strategic work of the
Solent Local Transport Board.

There is a perception held by some businesses of the high cost of goods for delivery on
and off the island. The team were told of cost effective shared pallet arrangements that
private companies were providing. The council could assume a role to promote low cost
alternatives for the transport of goods on ferries to counter misperceptions of this being
high cost and a potential barrier to inward investment.

The councils commitment to growth is evident from the priority in the Corporate Plan but
there is no economic growth strategy to support its delivery. With significant reduction in

14 July 2014 14

staff the number of staff focused on this priority may be insufficient to undertake the
strategic and leadership positions and lobbying roles required to deliver this.

In developing an economic growth strategy it will be important to define what is the unique
Isle of Wight offer for economic growth to promote inward investment. It will be equally
important to set out the islands ask to support economic growth so as to be able to clearly
present this to the Solent LEP and other external partners who may be able to deliver this.
Clearly defining the ask and offer will be important to create an identity and brand for the
island as an employment and visitor destination.

It was acknowledged that the link between economic growth and housing has not been
effectively made by the council. The services have tended to develop with separate
strategies and little other connection. The current housing strategy is currently out of date
and is scheduled to be updated following a Strategic Housing Market Assessment (SHMA).
This should provide an opportunity to more strongly align housing with economic growth.

Economic growth can only be achieved by ensuring a range of housing provision, from
market to affordable housing. Housing need on the island is evident with a housing register
of more than 7,400 and an estimated affordable housing shortfall of 1,500 per annum. This
is a major issue for the council and is emphasised by Office for National Statistics (ONS)
data that suggests that council projections will need to be revised. If housing issues are not
addressed they will impact adversely on the ability of the island to achieve economic
growth.

The council should develop a skills strategy that involves education providers, the Solent
LEP and local businesses and links into the LEPs Solent Employment and Skills Board to
ensure the councils skills objectives for the island are addressed at sub-regional level.

Educational attainment has been an issue for the islands schools, with the council
acknowledging that educational standards are the poorest in the country: the proportion
qualified to NVQ level 4 is much lower than regional and England averages. There is also
a business view that many school leavers lack the work skills that employers require and
that more senior positions are often filled by people from the mainland. This, and the
recent economic recession, appears to have affected both student attainment and
aspirations. Addressing the pre-16 years schools attainment will be particularly important
for resourcing the future islands economy and strengthening the employment prospects for
the islands young people. This is a priority for the council and is being partly addressed
through the strategic partnership arrangements with Hampshire County Council but the
issue highlights the need for a skills strategy, with a focus and action plan.

Finally, the council would benefit from a better understanding of the local economic impact
of council procurement of goods and services. As a major employer with significant spend
on goods and services (nearly 19m), it makes an important contribution to the local
economy. Reviewing this could identify opportunities for local procurement spend to be
better targeted. There is also a statutory obligation under the Public Services (Social
Value) Act 2012 for local authorities and other commissioners of public services to consider
how their services can benefit people living in the local community.

Recommendations:


14 July 2014 15

h) Produce and implement an Economic Growth strategy linking tourism, business,
skills and housing and involve business and principal partners in the development of
this. Rather than separate strategies the council may consider combining economic
growth, housing, skills and tourism as single combined strategy.
i) Define the unique Isle of Wight offer for economic growth and tourism to promote
inward investment. Also define its ask so as to clearly present this to the Solent
LEP and other external partners.
j) Produce and implement a skills strategy that ties in education providers, the Solent
LEP and local businesses and links into the LEPs Solent Employment and Skills
Board
k) Establish an economic growth partnership with principal tourism, business, skills and
housing partners
l) Develop, in consultation with island businesses, the councils leadership and co-
ordinating role in economic growth partnership working, becoming the voice for the
island
m) Ensure that the Quality Transport Group responds to strategic transport issues,
raised by the three ferry operators and island business interests, which affect
economic growth and tourism. Strategic matters of mutual interest must be
reported to the council and the Solent Local Transport Board.

Financial planning and viability

The council has a strong record in achieving savings (33.8m over the last three years; the
recent restructuring reducing senior management costs by 2.3m and total staff savings of
14.4m) and has done well in recent years to manage the significant reduction in
Government core funding without detriment to frontline services.

A bold and difficult decision was made by the council to increase Council Tax by 1.99 per
cent for 2014-2015, particularly for an administration with no overall control and when the
council tax had been frozen for the previous three years. This provided a base budget
uplift of 526,000 and was important at a time of great financial pressure. The council is
also aware that it may need to consider similar increases in future years.

Budget engagement events were arranged by the council across the island and this was
consistent with the new administrations approach to openness and discussion. This was
also exemplified by a Facebook live session to consult on budget decisions.

A strategy to use reserves has been developed by the council to ease transition through
the three year period of savings. This will be important to provide time to consider what the
future council might look like, what the principal partnerships might be and what core
services will be retained. However, this transition will see a reduction in the General Fund
reserve from 9m to 6m over the three year period, with the councils minimum General
Fund reserve balance set at 5m. Although in 2016-2017 this will be above minimum
balance level, its reduced level will inevitably limit council options and will be relatively low
compared to other councils.

The council has an immense challenge to address a financial gap of 28m over the three
year period 2014-2015 to 2016-2017. This is made more difficult by a reduction of
Government grant of 14.4m, over the same period, out of a net revenue budget of 129m.

14 July 2014 16

However, this is a challenge faced by local government across England and one being
turned into an opportunity by councils rethinking their role and means of delivery.

The additional and immediate challenge is not just the 28m savings but the 1.4m in year
savings required for 2014-2015. There is a risk that the income/savings target may not be
deliverable and this will require close monitoring. The savings proposals are highly detailed
but:

there are few references to managing the future demand for high cost services, for
example childrens, adults and social care
there is uncertainty on how robust the savings proposals are and, therefore, how
likely they are to be achieved
project management of the savings programme is not yet comprehensively
developed.

It is essential to address these issues quickly as this programme will need urgency and
pace.

Significant as the funding gap undoubtedly is there is a damaging perception internally
and externally - that savings will come mainly from discretionary services of circa 36m.
This is inaccurate and should be addressed by senior managers and Members, as staff see
the prospect of their services being decimated (in addition there is a risk of communicating
unhelpful messages in the community). Instead the emphasis should be on efficiencies to
be achieved across all services and rethinking what the future council will look like.

The council has adopted an approach to more closely monitor its contract and procurement
arrangements. It has established a central Procurement and Contract Management team
and adopted a Procurement Strategy. However, the procurement function is weakened by
some aspects being located in different service areas, for example ICT, leisure etc. There
would be benefit in combining these to scale up the procurement function with the skills
located in one place to deliver efficiencies.

There is scope for procurement and contract savings; with some of these potentially quite
large: for example the re-let waste contract from 2015 is expected to save circa 1m.
Understanding and identifying the areas for further savings will be essential and should
begin urgently. Due to reduced capacity and the urgency in realising savings, this is likely
to require some external expertise and input.

The focus on savings could be leading the council to miss opportunities for innovative
working. The outlook seems to be on worrying on what we cant do rather than about what
we can. Innovative thinking and new delivery models can achieve council priorities,
contribute savings and assist in repositioning the future council. The shift of emphasis
should include:

consideration of the additional contribution of economic growth and use of assets to
address the financial gap. For example, economic growth can be an important lever
to grow business rates, build the council tax base and increase New Homes Bonus,
and the creative use of assets may be able to generate an income stream.

14 July 2014 17

reform and transformation: consider how to manage and reduce demand pressures,
beyond meeting existing levels of demand more efficiently. This is true particularly
for Adults Services, with demand due to increase with an ageing population: there is
potential to invest further in preventative services and early interventions (such as
promoting healthier lifestyles, signposting to community networks, extra care
housing) that will reduce future demand on resources. Collaboration with Public
Health around lifestyle choices and encouraging behaviour change will be critical.
alternative delivery models: building capacity in communities, designing and
commissioning new solutions, commissioning partners to deliver services, entering
strategic partnerships to deliver where appropriate etc.
focusing on additional income generation opportunities.

There is an absence of an up to date strategic asset management strategy. It will be
important to update this strategy and strengthen this function so that use of assets can
enable the development of new delivery models. The council has a substantial property
portfolio that could be important not only to assist in meeting the budget gap but also be
used to leverage funding, provide income and investment streams and support the delivery
of council priorities.

There is an opportunity to consider the use of assets not only as a source of capital
receipts from disposal but also as a future revenue opportunity by retaining and sweating
assets. For example, the freedoms of the Localism Act 2013 enable councils to become
housing developers and landlords, which could both address some local housing issues,
addressing a council priority, as well as providing a future revenue stream.

Recommendations:

n) Implement communications to address the misperception that savings will come
mainly from discretionary services
o) Instil rigour within the savings programme to address the issues raised in this
section
p) Consider combining all areas of procurement within a the central Procurement and
Contract Management team to scale up the procurement function with the skills
located in one place to deliver efficiencies
q) Implement an updated strategic asset management strategy.

Capacity

The council has lost a good deal of capacity due to the funding pressures and recent
restructuring. This has led most staff assuming additional responsibilities and functions
leading to stretched capacity and capability at all levels. Added to this is an over reliance
on the goodwill of staff, illustrated by a long hours culture. For some this is leading to
pressures that are not sustainable and will need to be addressed. It will require Members
and senior managers to:

understand where the capacity pressures are greatest and need to be addressed
identify the important priority areas of activity that must continue
identify those areas of activity that are less important that will be either stopped,
done differently, deferred or discontinued.

14 July 2014 18


Only then can organisational pressures be relieved and the staff capacity released and
shifted to address agreed council priorities and ensure the delivery of further savings.

A consequence of the loss of capacity is insufficient pace to meet budgetary challenges.
With the emphasis being given to addressing the financial gap it was unclear what staff
resources and capacity had been shifted to this programme and, as a result of resource
shifting, what decisions had been made on what does not get done or is done less.

The council benefits from well-motivated staff that have energy, ideas and imagination.
However, this capacity is not being fully utilised. If the above work referred to above to
address pressure points is undertaken it will release capacity that can then be directed to
council priorities. This would need to be managed and could take the form of cross-
service task and finish project groups and structured senior manager working forums.

There are good working relationships between officers and Members based on trust and
mutual respect. This is supported by an acknowledgement by staff and Members of the
financial pressures and the need for new ways of working. Similarly, big strides have been
made in political cross-group working arrangements.

In repositioning the future council it will be important that there is a workforce strategy that
ensures Members and employees have the necessary skills for future ways of working.

The council has moved to a flatter service structure in the recent restructuring and
reduced from 42 to 28 work offices since 2008, with the plan to cut this to 8 by 2015.
However, closer staff working is not, so far, promoting improved corporate and strategic
working. This may be due to the capacity pressures, which reinforce a service focus, and
the attention given to the financial gap. The result is the council does not appear to value
strategic skills in planning ahead, with strategic planning and thinking time largely absent
from the current CMT working arrangements. This needs to be addressed so that
strategic direction can inform an understanding of what the future council might look like.

The council will need to establish succession planning arrangements. The interim
Managing Director is working to a contract which ends in April 2015. It will be essential
that advance preparation is undertaken to profile the skills and experience required from a
future Chief Executive/Managing Director and to allow time for recruitment.

Potential recruitment difficulties lie ahead with the loss of key personnel and skills. One
effect of the recent restructuring is that some senior officers have had their salaries
reduced. The council may experience difficulty in the future to recruit the calibre of
person required, to some posts, based on current salary levels.

Performance Development Reviews (PDRs) are an important part of the performance
management framework and provide the opportunity for staff to have one-to-one
discussions with their manager on: their performance, their training and development
needs and next years targets. The council recognises the importance of PDRs but there
are significant gaps in their completion, with the functionality of SAP referred to as a
blockage. A solution to this should be sought to correct the current break in the
performance golden thread.


14 July 2014 19

The councils commitment to partnerships is commendable and is included in its
Corporate Plan priorities. Many external partners are signed up to the priorities, set out in
the Corporate Plan; have a good understanding of the councils financial pressures and
many have shown goodwill to work with the council and add capacity. This should be a
productive area for discussion, which could include: supporting the third sector and
community delivery of services; pooled budgets; new commissioning models; joint
venture models and new forms of collaboration, which could uncover new opportunities.

The willingness to work in partnership will be vital to leverage resources at a time when
the council is facing significant financial pressures and is considering what it stops doing
and what partners might pick up. There is an opportunity for the council to take
partnership working to the next level. This could include a reconsideration of the councils
role and relationships with partners so that time and resources are focused where
partnership working adds most value.

The council is involved in a large number of different partnerships. It is likely that a
number of these will no longer be productive or beneficial and may no longer be aligned
to council priorities. Participation in partnerships that have outlived their usefulness is a
drain on capacity and resources. It will be important to review partnerships with a view to
these being rationalised and refocused. This could involve:

reviewing the cost/resource inputs of current partnerships against
benefits/outcomes
ensuring that partners know who to talk to and how to access the council. (This is
currently difficult following the recent restructuring and a quick win solution would
be to provide contact information on the councils website.)
initiating new partnerships where needed. It was striking to the team that there is
no forum that brings business, housing providers, skills providers and the council
around a table.
beginning a dialogue with partners on the future needs of the community and what
partners might contribute to, and where they might lead, with the council assuming
a more enabling role
considering how to work with partners on a jointly owned programme of public
service reform, which can develop new models of investment across organisational
boundaries, along with interventions and programmes that reduce demands on
services
considering how the council continues to have a leading partnership role for the
island, as community leader and the only partner with a democratic mandate
strengthening partnership working by developing an overarching partnership
framework and strategy.

Taking partnership working to the next level will involve redefining the council role so that
control and direct delivery is exchanged for influence and enabling others to deliver. The
principle of helping partners do more so the council can to do less will be an important
future model feature.

Recommendations:


14 July 2014 20

r) Develop a workforce strategy to support employees to have the necessary skills for
future ways of working
s) Make Performance Development Reviews (PDRs) mandatory and review the
efficiency of current support systems for PDRs
t) Establish succession planning arrangements for senior officers
u) Review partnerships with a view to these being rationalised and refocused to be
effective to deliver the councils priorities
v) Provide contact information to ensure that partners know who to talk to and how to
access the council: a quick win solution would be to provide contact information on
the councils website
w) Produce an updated partnership framework and strategy incorporating the principle
that control and direct delivery are exchanged for influence and enabling others to
deliver. This shift should place emphasis on the council role of bringing partners
together and being the voice of the island.

Governance and decision making

The Corporate Plan clearly sets out the councils vision, priorities and objectives and is
complemented by the administrations commitment to transparency and inclusive working.
One outcome from this is the ending of Executive Member delegated decision-making
with more decisions referred to full council.

This is supported by evidence of quick and difficult decisions made, for example the
decision to form the strategic partnership with Hampshire County Council to deliver the
councils childrens services and education service. Although the former was a
requirement from the Secretary of States Improvement Notice it is clear that the council
moved quickly to the new arrangements.

Scrutiny is holding Executive to account and is using task and finish groups on a range of
areas, including: the councils asset management policy; the use of reserves to balance
the councils budget and, more recently, the cross Solent ferries.

Despite this there is a lack of understanding of roles and responsibilities at Member and
senior officer level. The team were given examples of when individual Members had
requested service change or decisions at junior officer level without proper authority or
consideration of the appropriate level of officer/Member engagement. This can lead to
confusion about decision routes and potential frustration for Members who feel their
requests are not acted upon.

More work is needed on political management and the role of the Leader/ Executive and
CMT in overseeing such requests through a clearly understood process. Clarity is
needed on respective roles and responsibilities for decision-making for both officers and
Members to avoid ambiguity, uncertainty and delay. The development of a set of
protocols and decision flow charts would assist on this.

The commendable desire for democratic openness and transparency will need to be
balanced to avoid limited capacity being even more stretched by having to service and
support a wide range of meetings and initiatives. . The peer team considers that, from its
experience, the council has a high number of meetings that take up a great deal of senior
officer time. This has a productivity cost to the council and it is recommended that a review

14 July 2014 21

of meetings is undertaken to release capacity for other priorities. Establishing committees
and working groups should be governed by the condition that they add value and support
the achievement of one or more council priorities.

As an independent administration decision making operates by consensus and this has
many strengths. It has been possible so far for the administration to make decisions but
when there is a need to make a decision that supports the councils declared priorities and
/or make more challenging decisions then consensus can be more difficult to achieve. An
example is the decision-making discipline to meet the statutory requirement to make a
lawful budget, which was acknowledged to be difficult for 2014 -2015. This difficulty is
likely to be even greater for 2015-2016 with a funding gap of 13.29m more than twice
the previous year. The Independent group would benefit from considering how it needs to
organise itself to enable future difficult decisions for the council to be made. One way of
achieving this could be for the group to appoint a Member as a Business Manager.

There is a detailed performance management framework in place that is still developing.
This includes quarterly reporting to the Executive, CMT and Scrutiny. This is encouraging
but the framework would be beneficially adapted to consider measures to monitor more
qualitative outcomes for the island. This will be increasingly important as financial
pressures will require increasing focus on achieving objectives and measuring outcomes.
One area to consider would be greater use of benchmarking, comparing service
performance with other councils in order to learn from those with higher performance
levels. The LGAs LG Inform provides a means for authorities to compare performance:
https://knowledgehub.local.gov.uk/web/lginform

Recommendations:

x) The Independent Group will need to devise means to ensure that group
independence does not inhibit decision-making or result in decisions contrary to
council priorities. One way of achieving this could be for the group to appoint a
Member as a Business Manager.
y) Devise a Member/officer protocol to provide clarity and certainty on respective roles
and responsibilities and describes the flows in decision-making.

Moving forward - priority recommendations
Throughout this letter there are a number of suggestions for the council to consider with a
view to implementation.
Based on what we saw, heard and read we suggest you consider as a priority the
following key actions to build for the future operating model. These are things we think
will help you improve and develop the effectiveness and capacity to deliver your future
ambitions and plans.

1. Prepare for the new operating model by reviewing priorities in light of diminishing
resources and determining what will be the future core services delivered by the
council. It will be essential for the Executive and Corporate Management Team to
create strategic space, time and capacity to focus on developing this model.
2. Begin work to establish succession planning arrangements for the current position of
Managing Director. Advance preparation will be required to profile the skills and

14 July 2014 22

experience required from a future Chief Executive/Managing Director and to allow
time for recruitment.
3. Review organisational capacity to identify:
where the capacity pressures are greatest and need to be addressed
the important priority areas of activity that must continue
those areas of activity that are less important that will be either stopped, done
differently, deferred or discontinued.
This to be supported by a workforce strategy to ensure staff have the necessary
skills for future ways of working
4. Use external expertise, operating by payment by results where possible, to drive out
procurement and contract costs and deliver savings to the council. This could look
at initially high value areas to provide quick wins.
5. Produce and implement an Economic Growth strategy linking tourism, business,
skills and housing. The council could combine economic growth, housing, skills and
tourism as single strategy. This should be developed in consultation with island
businesses and consolidate the councils leadership and co-ordinating role in
economic growth partnership working to be the voice for the island.
6. Develop and fully implement a Communications strategy, supported by the
aggregation of communication functions, to address internal and external
communications.
We have attached a set of slides that summarise the above feedback. The slides are the
ones used by the peer team to present its feedback at the end of the onsite visit.

Next steps
You will undoubtedly wish to reflect on these findings and suggestions made with your
senior managerial and political leadership before determining how the council wishes to
take things forward.
As part of the peer challenge process, there is an offer of continued activity to support
this. The LGAs Principal Adviser will be pleased to work with the council to address any
and all of the other issues mentioned in the letter.

In the meantime we are keen to continue the relationship we have formed with you and
colleagues through the peer challenge to date. [paragraph with LGA contact information
deleted]

In the meantime, all of us connected with the peer challenge would like to wish you every
success going forward. Once again, many thanks to you and your colleagues for inviting
the peer challenge and to everyone involved for their participation.


Yours sincerely



14 July 2014 23


Andrew Winfield
Peer Challenge Manager (Local Government Support Team)
Local Government Association
[contact information deleted]

On behalf of the peer challenge team:

Gillian Beasley, Chief Executive, Peterborough City Council
Tony Clarke, Independent regional lead peer, LGA
Councillor Alan Jarrett, Deputy Leader and finance portfolio holder, Medway Council
Sarah Richards, Strategic Director Regeneration, Housing and Resources, Slough
Borough Council
Harry Downie, Assistant Director, Business Redesign and Development,
Communities and Wellbeing, Bury Metropolitan Borough Council
Mark Poppy, Project Director for Local Partnerships, LGA